A high-yield investor and a distressed analyst say certain distressed telecom issues currently under Chapter 11 bankruptcy protection offer considerable upside to investors. Ron Bringewatt, managing director at The Seaport Group, says Adelphia Business Solutions (ABiz) could see considerable upside if it wins a pending lawsuit against Adelphia Communications, its former parent. Even discounting the litigation, Bringewatt argues that the company's reorganization plan is on track, and he sees value in both the 12.25% notes of '04, which were bid at 52.5 last week,and the 13% notes of '03, which were seen recently at an 11 bid.
In addition to ABiz, Richard Coons, portfolio manager at Catrock Capital Management, recently purchased issues from Frontier Communications, a subsidiary of Global Crossing. A group of Frontier noteholders, including MatlinPatterson Global Opportunities Partners, a firm run by high-profile distressed debt investor David Matlin, is suing JPMorgan Chase for $600 million plus interest and expenses, arguing that the bank did not honor its obligation as indenture trustee to protect the interests of Frontier noteholders. Coons believes that the lawsuit is likely to be at least partially successful, and observes that the Frontier notes trade just a point higher than comparable issues from Global Crossing.